ChexSystems: What It Is, and How It Can Make It Difficult for You to Open a Bank Account

by Lauren Treadwell on 19 December 2012 4 comments

ChexSystems provides financial institutions with information about how responsible you are with your bank account, and derogatory entries on your report can cause denial of applications for bank accounts and other banking products and services. A 2003 amendment to the Fair Credit Reporting Act, called the Fair and Accurate Credit Transactions Act, provides a free copy of your ChexSystems report every year. This allows you to keep tabs on the information banks report to ChexSystems to ensure it’s accurate. If the information is erroneous, you can file a dispute to have the entry removed from your file. However, if it is correct, the item will remain on your report for five years. (See also: 10 Surprising Ways to Negatively Affect Your Credit Score)

Ordering Your Report

You can order your annual free report online, over the phone, or by mail.

To Order Online

Visit the ChexSystems consumer website, and select “FACTA Free Report" from the menu at the top of the page. You’ll need to include your name, any previous names or aliases, your Social Security number, date of birth, driver’s license number and state, phone number, and your current and previous addresses for the past five years.

To Order by Phone

Contact the ChexSystems consumer relations department at 1-800-428-9623. You’ll be leaving a voicemail message, so speak slowly and clearly so the worker who reviews your request can accurately dictate your information from the recording.

To Order by Mail

Download, print, and complete the ChexSystems report order form to mail or fax your request.

However you order your report, you will usually receive it within 10 to 14 days of ChexSystems receiving your request.

The ChexSystems Consumer Score

ChexSystems uses a scoring system similar to the other big three credit agencies’ that provides banks with a snapshot of your account riskiness. This figure is called the ChexSystems Consumer Score, and it ranges from 100 to 899.

Although the annual report is free, you will have to pay to receive your consumer score from ChexSystems. Download, print, and complete the score order form and mail it along with the $10.50 fee. You will receive your Consumer Score within 10 to 14 days.

Reviewing Your Report

Once your report arrives, examine it carefully for mistakes.

  • Your name and current address will appear at the top, along with the consumer ID number ChexSystems assigned you.
     
  • Next is the personal information ChexSystems has on file for you. It will include your date of birth, previous names and aliases, and your current and previous addresses.
     
  • Information about any identity theft is in the next section, followed by information about any security freezes that restrict access to your report.

If there is detrimental information in your Chex System file, it will appear in the “Reported Information” and “Retail Information” sections.

  • Reported Information provides information about bounced checks, overdrafts, insufficient fund activity, debts owed for fees, or account overdraws and the bank that reported the data.
     
  • Retail Information gives details about checks that were not honored at grocery stores and other retailers. If you do not have information in either of these sections, your name is free and clear on ChexSystems.

Disputing Incorrect Information

Initiate a dispute if you believe any of the information on your report is inaccurate.

  • Download, print, and fill out the Request for Reinvestigation form with the personal information you provided in your original request, and include the Consumer ID number you received.
     
  • Provide the name of the bank that furnished the information, the account number, and the date listed on the erroneous information. Include a description of the mistake and the correct information, as applicable.
     
  • Sign the bottom of the form.
     
  • If you have paperwork or other evidence, include copies in the envelope along with the dispute form.
     
  • Make a copy of the dispute form for your records and mail the original to ChexSystems Inc., Consumer Relations Department.

The Fair Credit Reporting Act requires reporting agencies to investigate and respond to disputes within 30 days of receiving them, so send the form by certified mail and request a return receipt to receive notification of the exact day ChexSystems receives it. If ChexSystems cannot verify the disputed information after 30 days, it must change the entry to reflect the information you provided or delete the entry.

To keep your good name and account history out of ChexSystems, make sure you always have enough money in the bank to cover outstanding checks, automatic withdrawals, and electric funds transfer payments. If you do run into trouble, make a deposit as soon as possible to cover the overdraft and any fees. Opting-in to your bank or credit union’s overdraft protection program will also help you avoid a ChexSystems hit.

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Me

As a banker, I applaud this article and it's accuracy, considering that most people have never heard of ChexSystems, and trying to explain it to people who insist that they "don't write checks" can be difficult. However, may I suggest that you change the title of the article to something more like "....and How it Can Affect Your Banking". I'm sure it wasn't intentional, but the title suggests that it's ChexSystems and banks that cause the difficulty when opneing accounts instead of the consumer. Despite popular belief, banks rarely make mistakes when it comes to the average Joe's bank account. I'm not talking about big bailouts or anything on that scale. ChexSystems does not make it difficult for you to open a bank account; YOU make it difficult by making poor financial decisions. I'm not judging, really; we've all been there. I'm just stating a fact. Every single day I listen to people with negative data on ChexSystems blame it on everybody but themselves. Own up to your mistakes and make an effort to not do it again and everything will be fine. :)

And for the record, the bank I work at offers second chance checking accounts, so even people with negative data can have a checking account.

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Becca

This is really good information to have. Not many people know about, including me, until now. I've found that the banks turn over some accounts to collection agencies which are nasty to deal with.

Thanks for posting this. I appreciate it.

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Guest

This free consumer organization has a list of non chexsystems banks that can help the unbanked - http://www.badcreditmd.com/second-chance-checking-account/

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Guest

Chexsystems consumer reports can become a serious burden to families and individuals looking to open up a new checking account. Any negative mark, whether minor a major, can prevent a consumer from having a checking or savings account.

Luckily today, there are many credit unions and banks that are either local or have branches nationwide that are willing to overlook a person's Chexsystems report. A website called "InfoAviator" at http://infoaviator.org/finance/checking-accounts/2014/05/28/how-to-open-a-second-chance-checking/ has a large verified list of these financial institutions offering "Fresh Start" and "Second Chance" checking programs that were specially designed for people that had a poor history of managing checking accounts.